UAE’s Federal Tax Authority (FTA) just announced that it will be placing a 100% tax on tobacco and energy drinks, a 50% tax on all carbonated beverages, and a value added tax of 5%. Whilst registrations will start in the third quarter of this year, the implementation will take effect by this year’s fourth quarter.
The decision took place following a meeting chaired by Sheikh Hamdan bin Rashid Al Maktoum. The reason given for having taken this decision is said to be an active attempt for economic diversification. This is a necessary step if the UAE wants to mitigate the damages it has incurred as a result of the crash in oil prices.
According to Gulf News, Sheikh Hamdan stated that “the tax procedures law is in the final phase, and will soon be issued and published. The VAT law is being debated by the technical legislative committee in preparation for submitting it to the Cabinet for approval, while the selective tax draft law will be soon discussed by the committee.”
Awareness campaigns, organized by the Ministry of Finance, are already taking place to ensure compliance with these new tax laws. Workshops are now being organized to help with the tax – related registration procedures.